Voter Initiative Lets Hidden Funds Into Mayoral Race

Under a cloak of secrecy created by passage of a state ballot measure last fall, huge sums of cash are being poured into the Los Angeles mayoral race to promote two candidates--Steve Soboroff and Antonio Villaraigosa--without any public disclosure of how much money is involved or where it is coming from.

Already the state Republican Party has sent multiple mailers to GOP voters backing Soboroff and taking aim at his rivals in the mayor’s race. State Democratic Party officials have boasted that they plan a major push on Villaraigosa’s behalf in the final days before the April 10 election, and one mailer touting Villaraigosa’s endorsements has begun arriving in Los Angeles homes.

But the exact amounts being contributed--and the individual sources of that cash--are and will remain a mystery for some time.

The result, rival candidates and others say, is that Los Angeles’ campaign finance rules are being undermined and the public is being asked to consider candidates without knowing who is behind their campaigns.

“The public doesn’t have any type of handle on how much money is being spent on these activities,” said Lee Ann Pelham, executive director of the Los Angeles Ethics Commission. “You could have a lot of money being spent to influence the city’s election that will now go unreported.”

That’s because 4-month-old Proposition 34 allows the two political parties and other organizations to communicate with members without publicly disclosing their spending, or the sources of their funds, until after voters go to the polls.

The ramifications of that measure are being felt in Los Angeles, but the campaign here is being closely watched across the state for indications of what it means for other areas. The same language that permits contributions to go unreported in the Los Angeles mayor’s race could allow political parties, unions and others to weigh in on behalf of local candidates up and down California with voters unable to scrutinize the size and source of those efforts.

In Los Angeles, it will not be until July 31--after the new mayor has been in office for one month--that the Democratic Party will have to report its fund-raising for mailings and phone banks on behalf of Villaraigosa.

Similarly, the reports on fund-raising for Republican mailers attacking Soboroff’s rivals will not be revealed by the Republican Party until after voters have cast their ballots.

The issue grows out of a special exemption in state law for “communications with members” by political parties and other organizations. Under Proposition 34, the cost of such communications typically must be revealed only quarterly or semiannually.

That’s different from contributions made directly to candidates for Los Angeles city offices. Those contributions must be reported with increasing frequency as election day approaches.

Under the state law, there is no limit on how much an individual, company or labor union can give for such communications with members, according to Lance Olson, general counsel to the California Democratic Party.

Proposition 34, crafted by Senate President Pro Tem John Burton (D-San Francisco) and rushed through the Legislature for placement on the ballot last year, overturned a campaign reform measure passed by the voters in 1996. The proposition, which established a less restrictive system, won the approval of 60% of voters last November.

An Unexpected Consequence

It was expected that the major effect of the changes would be on legislative contests and campaigns for statewide office after the 2002 elections.

“Nobody really expected the impact of Proposition 34 on local elections,” said Karen Getman, chairwoman of the state Fair Political Practices Commission. “It wasn’t a part of the campaign discussion. I’m not sure people really understand it. The impact is yet to be felt. The mayoral election in Los Angeles is the first major test of that.”

The language regarding member communications carved a loophole in the city’s efforts to regulate campaign fund-raising and spending. The provision says communications to members, employees or shareholders of an organization or their family members to support or oppose a candidate need not be reported promptly as long as the spending is “not made for general public advertising such as broadcasting, billboards and newspaper advertisements.”

Democratic attorney Olson said “Proposition 34 provides that member communications do not constitute an independent expenditure or an in-kind contribution.” The messages are potentially just as potent, however, since the parties claim all their registered voters are “members,” thereby including a huge chunk of the Los Angeles electorate. While reaching fewer people, organized labor still counts 175,000 union households in the city.

“We should really know how much is being spent on behalf of Soboroff and Villaraigosa before the election,” said Bob Stern, president of the Los Angeles-based Center for Governmental Studies.

Stern said the member communication provision allows donors to give to the political parties and circumvent the city’s campaign contribution limits. A former chief counsel to the Fair Political Practices Commission, Stern is adamant that Proposition 34 was designed by the Legislature as “phony reform. This is a taste of it at the local level.”

State Democratic Party Chairman Art Torres has pledged to assist former Assembly Speaker Villaraigosa in his quest to capture the mayor’s office. A state party official estimated that $500,000 would be spent for phone banks, precinct walking and sending a mailer to Democrats promoting the former lawmaker.

Indeed, the state party this week sent Democrats in Los Angeles a colorful mailer that details Villaraigosa’s endorsements by key Democrats--including Gov. Gray Davis, Sen. Barbara Boxer and Rep. Henry Waxman--as well as the Sierra Club and the National Organization for Women.

Sizable Contributions Won’t Be Disclosed

Who is paying for these efforts remains a closely held secret. Party officials will not discuss it.

But billionaire investor Ron Burkle is among the donors.

“We have always given to the Democratic Party and we are giving to it now and we will give to it in the future,” said Ari Swiller, spokesman for Burkle’s firm, the Yucaipa Cos.

Swiller declined to comment on how much money Burkle would give the Democrats. He said that, as required by law, the money would not be earmarked for Villaraigosa or any other single candidate. Burkle has also contributed directly to Villaraigosa’s campaign.

Meanwhile, the county Federation of Labor has been mounting its own telephone and mail blitz on Villaraigosa’s behalf.

Federation chief Miguel Contreras said $500,000 to $1 million will be spent to promote Villaraigosa, school board candidates Julie Korenstein and Valerie Fields, and passage of a community college bond issue.

“We’re not going anywhere except union members, not to the general public,” he said. “It’s just an internal operation.”

As such, Contreras said, the precise amount spent will not be disclosed.

The labor organization’s campaign includes recorded phone messages from Contreras targeted at union members.

In one of those messages, he says: “Los Angeles working families are at a critical crossroads, and we need a mayor who promotes union contracts, prevailing wages, overtime pay and opposes contracting out. Antonio has been a union organizer who’s been there for us. Now we need to be there for him.”

The phone messages are being reinforced by personal calls and mailers from labor unions, including United Teachers-Los Angeles, which emphasizes its support for Villaraigosa, a onetime organizer.

In at least one of the calls placed on Villaraigosa’s behalf, the caller urged a Latino voter in a union household to support the former Assembly speaker. At the end of the conversation, the caller criticized U.S. Rep. Xavier Becerra, another mayoral candidate. “Even though he is a Democrat, he is not in favor of poor people,” the caller said.

“That’s the worst kind of campaigning,” said Paige Richardson, campaign manager for Becerra. “That’s the reason people are disgusted with the political process. . . . We understand they have endorsed Antonio, but that doesn’t mean they have to slander Xavier.”

Villaraigosa said he has “no control over” expenditures on his behalf. Asked if finance rules should be changed so political parties have to report expenditures to their members more promptly, he said: “I am willing and interested in looking at that issue. I just don’t know enough with respect to what the law is on that.”

On the other side of the political spectrum, the state Republican Party has already sent three mailings to Republican voters on behalf of Soboroff. They link the businessman with outgoing Mayor Richard Riordan, but also attack his five major rivals, James K. Hahn, Kathleen Connell, Joel Wachs, Villaraigosa and Becerra.

Jim Camp, political director of the state GOP, said the mailings are simply communications with registered Republicans.

“Based on Proposition 34,” he said, “we can raise these unlimited amounts and not have to consider them an independent expenditure.”

Camp said the state party would probably report the money raised and spent for the mailers in its next quarterly report, due April 30. But that’s almost three weeks after the city election, and, in any event, the report will not specify which mailings were for Soboroff, he said.

Exemptions Likely to Be Used Across State

He refused to discuss the amount raised and spent so far and would not talk about the party’s plans for additional mailers.

Camp said he expects the Republican Party to use the exemption for member communications in other races across the state. Asked if the party is actively raising money to pay for those “member communications,” he said: “The party is in a constant state of fund-raising. That is one of our primary goals.”

Councilman Wachs, one of the candidates attacked in the mailers, complained bitterly about the state GOP’s use of Proposition 34 to avoid disclosing the sources of the money behind the mailers.

“It’s a fraud. It’s a subterfuge,” Wachs said. “It’s a way to get around the campaign finance laws and contribution limits. . . . In the end, the public loses.”

Soboroff’s campaign consultant, Ace Smith, said he knew nothing about the Riordan or Republican Party mailers.

“I don’t want to know anything about it,” he said, a contention that Wachs dismissed as “an absolute, baldfaced lie.”

While disavowing any knowledge of the mailers, Smith said he was happy to receive the help. “Whatever people want to do, we love it,” he said.

And he sought to counter criticism of the GOP’s activity by noting that “Antonio’s got labor unions and the Democratic Party. It’s absolutely no different.”

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Times staff writer Robert J. Lopez contributed to this story.